EuroWire, NEW YORK: Gold and silver prices suffered historic one day losses on Friday after U.S. President Donald Trump said he would nominate Kevin Warsh to lead the Federal Reserve. The most active silver futures sank 31.4% to settle at $78.53 an ounce, their worst session since March 1980. U.S. gold futures settled 11.4% lower at $4,745.10.
The drop reversed a surge that had carried both metals to record highs this week. Spot gold hit $5,594.82 on Thursday before sliding sharply on Friday, while spot silver set a record at $121.64 on Thursday. Even after the selloff, prices were still higher for the month of January, after a rally that had accelerated in the final week of trading.
The selloff followed Trump’s announcement that Warsh will be nominated to succeed Jerome Powell, whose term as chair ends in May. Investors had focused closely on the nomination given the central bank’s role in setting interest rates and its influence on the U.S. dollar. The nomination and subsequent repricing hit assets that had benefited from earlier demand for inflation hedges and alternative stores of value.
Moves in currency and rates added to the pressure. The U.S. Dollar Index rose about 0.7% on Friday, making dollar priced commodities more expensive for many buyers outside the United States. Industrial metals also weakened in the broader retreat, with copper prices falling alongside the precious metals complex as traders reduced exposure after an unusually volatile month.
Monetary policy reset
Silver’s fall was amplified by the metal’s higher volatility and its heavy use in leveraged futures trading. The most active contracts swung sharply through the session, touching about $75 at the lows before settling at $78.53. Gold futures also saw wide intraday ranges after topping $5,500 this week. The scale of Friday’s moves placed both contracts among the largest one day percentage declines seen in decades.
Exchange traded funds that track the metals fell in tandem. Shares of SPDR Gold Shares dropped about 10% and iShares Silver Trust slid roughly 27% on the day, reflecting the steep declines in futures and spot benchmarks. The pullback also hit related corners of the market, including other precious metals that had posted sharp gains earlier in the month.
Warsh, 55, served as a governor at the Federal Reserve from 2006 to 2011 and was part of the U.S. policy response during the 2008 financial crisis. His nomination requires Senate confirmation. A confirmation process could stretch over weeks or longer, and Fed officials continue to set policy in the meantime through scheduled meetings and economic data releases.
Fed leadership and market pricing
Traders ended the week recalibrating positions that had been built during January’s run up, when gold rose more than 20% for the month and silver posted even larger gains. With prices having climbed rapidly into record territory, Friday’s reversal produced sharp declines across futures, options, and metal linked funds. Market participants now turn to the confirmation process and incoming economic indicators for the next set of verified signals shaping rates, the dollar, and commodity pricing.